The Silk Road To Federal Prosecution: The Charges Against Ross Ulbricht
As you already know if you follow such things, the feds have raided an online black market called "Silk Road" and charged a man named Ross Ulbricht with various federal crimes on the theory that he is its mastermind known as the "Dread Pirate Roberts."1 You can find posts discussing Silk Road's place in Internet culture at BoingBoing or TechDirt or ArsTechnica.
Yeah, I know. Look, don't blame me if you keep reading.
So What's Happening?
The U.S. Attorney's Office for the Southern District of New York — that is, the federal prosecutorial agency for the region covering New York City — has filed a criminal complaint against a man named Ross Ulbricht, charging him with federal crimes in connection with the site Silk Road. Meanwhile, the U.S. Attorney's Office for the District of Maryland has obtained a grand jury indictment against him.
The New York complaint and its supporting affidavit of probable cause is here. The Maryland indictment (actually the Superseding Indictment, meaning there was an earlier one they have convinced the grand jury to modify) is here.
The New York and Maryland charges represent two different ways the feds can charge you with a crime. The feds can indict you, which means they present their evidence to the grand jury, draft an indictment, and ask the grand jury to approve the indictment. Or they can seek a criminal complaint by presenting a statement of the charges (the complaint) and a supporting statement of facts supporting probable cause (the affidavit of probable cause) to a United States Magistrate Judge. The Magistrate Judge reads the affidavit, finds it adequate to show probable cause for the crimes charged, and signs it and the requested arrest warrant. Often they do both. If the feds start out by charging you in a complaint, you have a Fifth Amendment right to grand jury indictment unless you waive it or you're only charged with a misdemeanor. Therefore most people charged with felonies by the feds get indicted right out of the gate or get hit with a complaint and then an indictment.
How Long Has This Been Going On?
For a while. The federal government's competitive advantage is the ability to use vast resources to conduct leisurely investigations. Except for reactive cases — say, where someone catches a bank robber in the act — it's very common for the feds to take many months or a few years to investigate a case.
Here, we know that the Maryland case has been open since May, since PACER shows that the first filing in the Maryland case (probably a sealed complaint or initial indictment) was in May 2013. The U.S. Attorney's Office in Maryland obtained their superseding indictment on October 1, possibly after Ulbricht's arrest in San Francisco. Today — October 2 — the Maryland federal court unsealed only the superseding indictment. The superseding indictment was item 4 on the docket; from that I infer that there was an earlier indictment and motion to seal on May 1, but not an earlier complaint.
The New York complaint was only filed on September 27, 2013, but reflects an investigation lasting longer than that.
"Under Seal?" What Does That Mean?
Federal cases are public, and appear fairly quickly on PACER. Federal prosecutors routinely seek, and federal judges routinely grant, orders hiding the case from the public until the defendant is arrested so that they won't be tipped off and flee, and so that prosecutors and federal agents can plan arrests and accompanying searches. Parts of the Maryland case docket are now available on PACER; as of this writing the New York docket hasn't hit PACER yet. It can take a few days.
What's Ulbricht Charged With, Anyway?
The New York complaint charges Ulbricht with three crimes:
1. A conspiracy to traffic in narcotics in violation of Title 21, United States Code, section 846. That charge requires proof that (1) that two or more persons agreed to distribute drugs in violation of federal law, and (2) the defendant knew of the agreement, and (3) the defendant intentionally joined the agreement.
2. A "computer hacking conspiracy" in violation of Title 18, United States Code, section 1030(a)(2).2 That charge requires proof that (1) there was an agreement intentionally to access a "protected computer"3 without authorization or in excess of authorization and get information from the "protected computer," (2) the defendant knew about the agreement, (3) the defendant intentionally joined the agreement, (4) somebody committed an "overt act" — some affirmative step — in support of the agreement.4
3. A conspiracy to launder money in violation of Title 18, United States Code, sections 1956(a)(1)(A)(i) and (a)(1)(B)(i). That charge requires proof that (1) the defendant conducted a transaction with money, (2) the money was the proceeds of an unlawful activity specified in the statute (including, for instance, drug trafficking), (3) the defendant knew that the money was the proceeds of that specified unlawful activity, and (4) the defendant intended that the transaction promote the activity or conceal the nature, the location, the source, the ownership, or the control of the money.
The Maryland indictment charges Ulrich with three crimes:
1. A narcotics trafficking conspiracy, under the same statute discussed above.
2. Attempted murder of a federal witness in violation of Title 18, United States Code, section 1512. That charge requires proof that the defendant (1) attempted to kill a person (2) intending to prevent the person (3) from communicating to federal law enforcement or a federal judge (4) about the commission of a federal crime. The indictment charges Ulbricht as someone who aided and abetted this crime under Title 18, United States Code, section 2; under that theory, if another person commits a federal crime, the defendant is equally guilty if the defendant intentionally "aids, abets, counsels, commands, induces or procures" the commission of the crime.
3. Use of interstate commerce facilities to procure murder-for-hire, in violation of Title 18, United States Code, section 1958. That charge requires proof that the defendant(1) used or caused another to use any facility of interstate or foreign commerce (like the internet); (2) with the intent that a murder be committed; (3) in exchange for something of value.
Does that sound serious? It's very serious.
Holy Shit! What Do They Claim He Did?
Both the New York complaint and the Maryland indictment claim that Ulbricht ran Silk Road as a market for illegal drugs and collected a fee for transactions. The Maryland indictment claims that Ulbricht used Silk Road to arrange a cocaine transaction between an undercover agent and a seller. The New York complaint says that undercover agents have made more than 100 purchases of illegal drugs through Silk Road.
The Maryland indictment also asserts that Ulbricht paid an undercover agent to kill a former Silk Road employee who had stolen from Ulbricht and was cooperating with federal authorities after an arrest. The agent staged a death picture and sent it to Ulbricht. The New York complaint doesn't charge Ulbricht with murder for hire, but does detail a long correspondence in which Ulbricht allegedly tried to hire a killer to murder a Canadian extortionist. There's no indication that the murder occurred or that the murderer was an undercover, so it may have been a scam by the purported murderer. The presence of the murder scheme in the New York complaint is entirely gratuitous to support holding Ulbricht without bail and make him look menacing, even though it may actually signify that a purported criminal mastermind was duped by fake murderers in two separate countries. Federal criminal justice is like that.
The indictment is short and colorful; the complaint is long but has much more factual detail. The indictment is fairly typical and adequately written. The complaint has much detail, but is subject to criticism. An affidavit of probable cause is supposed to provide facts showing probable cause that the defendant committed the charged crimes. Part of an adequate affidavit of probable cause is attribution — stating how the federal agent swearing out the affidavit knows the facts stated in the affidavit. If the affidavit doesn't say how the witness knows the facts, it doesn't support probable cause. This is the difference between saying "the defendant robbed First National Bank" and saying "I spoke to Teller Tessie of First National Bank, who told me that the defendant, whom she recognizes from past transactions, pointed a gun at her and demanded the money in her teller drawer." This affidavit isn't as bad as, say, the Zimmerman affidavit, but it's pretty bad — it relies on generic "based on my knowledge" and "based on my familiarity" and "based on an analysis" statements rather than more specific statements.
Most of the complaint reflects fairly straightforward federal investigative work, though the efforts to tie Ross Ulbricht to "Dread Pirate Roberts" of Silk Road, starting at paragraph 33, are quite interesting.
How Much Time Is Ross Ulbricht Facing?
Lots, but not the silly numbers the media will tell you.
The New York complaint mentions specific amounts of drugs trafficked over Silk Road; those allegations are calculated to trigger a ten-year mandatory minimum sentence under Title 21, United States Code, section 841. Recently I explained Attorney General Eric Holder's memorandum giving prosecutors discretion to refrain from triggering mandatory minimum sentences; this is not a case where such discretion would be exercised.
The media will report what Ulbricht faces by adding up the statutory maximum sentence on each charge and reporting it as if it's a likely sentence. In fact, if convicted Ulbricht will be sentenced by a federal judge taking into account arcane calculations under the U.S. Sentencing Guidelines. I've tried to explain the difference here and here. If convicted Ulbricht likely faces a ten-year mandatory minimum sentence and an actual sentence of as much as a few decades, depending on the amount of drugs traded and money laundered. However, the "he faces up to 300 years in jail" numbers you will be hearing are nonsense.
So What Happens Next?
If Ulbricht had been charged in one place and arrested in that place what happens next would be fairly straightforward; I described how it works in the context of the Boston Marathon bombing.
But this is twice as complicated, because (1) Ulbricht was arrested in San Francisco, where he's not charged, and (2) he's charged in two places.
First, the feds have to get him back to someplace he's charged. Occasionally federal agents ship a defendant to another district without a hearing if they "consent."5 They don't do that in high-profile cases. Today Ulbricht appeared before a United States Magistrate Judge in federal court in San Francisco. That appearance was explicitly based on the New York complaint, not the Maryland indictment; the government is seeking for now to send him to New York. The Magistrate Judge in San Francisco ordered Ulbricht held without bail pending another hearing this Friday, October 4. At that hearing Ulbricht may or may not seek bail and ask to be allowed to surrender in New York; I would be shocked if the judge agreed. Ulbricht may consent to be transferred to New York without further hearings. If he doesn't, he is entitled to a hearing on whether he is the same Ross Ulbricht charged in the complaint.6 He's also entitled to a probable cause hearing before his transfer unless the feds in New York get a grand jury indictment first. From that, and from the fact that the government consented to the next hearing being in two days, I infer that either (1) New York has already indicted him, but the indictment isn't unsealed yet, (2) New York is indicting him Thursday or early Friday morning, or (3) there is a deal in the works to waive indictment. See, the feds like to avoid probable cause hearings with their cross-examination and public proceedings and other hallmarks of due process whenever they can; that's why they indict quickly to avoid them.
So: Ulbricht is likely to head back soon to New York to face an indictment that's not public yet. There he'll make his first appearance before a Magistrate Judge, be informed of the charges against him, and either consent to being detained or make an almost-certainly-futile plea for bail. His case will be assigned randomly to a United States District Judge, and eventually he'll make an appearance before that judge and get a trial date.
What about Maryland? That depends. Ulbricht, if he's inclined to plead, could plead to a deal in one district that wraps up the charges in both districts. Or Maryland may have to wait its turn. It's even possible — though I see no clear evidence of it yet – that this flurry of charges represents a who-gets-him-first battle between the two districts. When that happens it's always entertaining, though perhaps not so much for the defendant.
If I were a betting man, I'd bet it happened like this: New York started investigating Silk Road in 2012, taking its time. Someone in the investigation figured out that Dread Pirate Robers was thinking about having the Maryland witness whacked and Maryland agents and prosecutors got involved. Maryland indicted first, asserting jurisdiction based on a scheme to murder one of its inhabitants. But New York made its charges public first and arrested first — possibly by agreement, possibly by gamesmanship.
My Head Hurts
I did warn you.
- Have fun storming the federal criminal justice system! ▲
- That's sloppy drafting on the part of the Southern District; the conspiracy provision is section 1030(b). Section 1030(a)(2) is the substantive offense you might conspire to violate. ▲
- A “protected computer” means a computer (A) exclusively for the use of a financial institution or the United States government, or used by them in a way impacted by the intrusion, or (B) in or affecting interstate or foreign commerce or communication, which with the internet means just about every computer. ▲
- I would indulge in a diversion explaining the problems with charging someone with conspiring with — or aiding an abetting — an undercover agent who isn't actually committing a crime, but the sun would go dark and my fingers would fall off and you would fall over and blood would gush out of your head on the carpet. Who's going to clean up after that? ▲
- Or if the agent claims they consented. ▲
- You don't get such a hearing if you are arrested in the district where you are charged; you only get it if you are arrested in another district. Home is the place where, if you go there, we trust that federal agents recognize you. ▲
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